Personal income tax too high for low-income earners
Under the current PIT law, pho sellers and taxi motorbike taxi drivers have to pay tax.
The General Department of Taxation (GDT) in late 2018 released a document instructing taxation agencies to regularly check if they have sufficient information about the income of individuals who have irregular income such as taxi moto drivers, drivers of small self-modified trucks, construction work contractors and owners of unlicensed street shops.
Ba and his wife, who run a banh mi vending shop in district 7, HCM City, said with the price of VND20,000 for one sandwich, they earn VND10-12 million a month. If they have to pay tax, they will not have money to feed themselves and fund the studies of the two children at secondary and high schools.
Under current regulations, individuals with revenue of VND100 million a year or more will have to pay some type of tax, including PIT.
Analysts say that the VND100 million taxation threshold is too low compared with the current spending level and living standards of the people.
A pho shop owner has to pay PIT if he can sell 8 bowls of pho or more every day, but they are not allowed to deduct money to buy beef, pork, noodles, or pay for assistants.
|In early September, hundreds of drivers for ride hailing firms protested when the HCM City Taxation Agency said that drivers with income of VND100 million a year or more are subject to taxation.|
The taxation policy has been facing strong opposition from the public. In early September, hundreds of drivers for ride hailing firms protested when the HCM City Taxation Agency said that drivers with income of VND100 million a year or more are subject to taxation.
The drivers have to pay 4.5 percent of total revenue. This includes 3 percent in VAT and 1.5 percent in PIT. If they receive a bonus, they have to pay tax which is equal to 1 percent of the amount.
The drivers said it is unfair that they have to pay higher tax than workers in other fields who have the same number of working hours and level of income. The problem is that they have to pay tax on revenue, without family circumstance deductions and operation cost deductions (expenses on petrol and vehicle depreciation).
At a meeting with the HCM City Taxation Agency, Do Ngoc Thinh, a Grab taxi driver, said in order to have revenue of VND100 million a year, drivers have to work 10-12 hours a day instead of eight hours like other workers. They have to work under the rain and sun and face high risks to earn money to pay for rent, feed their families and fund children’s studies.
The Ministry of Finance (MOF) says that personal income tax (PIT) rates have become out of date after six years of application and need amendment.